Credit, collections & insolvency news

More than half of consumers have never checked their eligibility when applying for a credit card, loan or mortgage, new research from Experian reveals.

Each time someone makes an application, a “hard search” is recorded on their credit report which could impact their credit score and reduce their chances of getting accepted for the best deals in the future. Eligibility helps consumers by leaving a “soft search” and showing them which products they are likely to get before they apply without affecting their credit score.

But Experian has found 55% of UK consumers have risked damaging their credit score by applying without first checking how likely they are to be accepted – despite it typically taking less than a minute to do so.

Nearly a quarter (23%) of those who admitted they haven’t said it was because they don’t know what the benefits are and another 20% incorrectly believe that checking will negatively impact their credit rating.

Other common reasons for not checking include not hearing of an eligibility tool (18%) and not wanting to provide personal information including bank account details (18%). Another 15% said there was no guarantee they’ll be accepted for credit even if they used eligibility.

Interestingly, it appears that older consumers are more reluctant to use eligibility. Three quarters (75%) of those 55 and over have never checked, compared to just 25% of 25 to 34 year olds.

Analysis of the latest data from Experian also shows how important checking is. Some 15.8% of consumers shopping for personal loans on its comparison website in March had a “0%” eligibility rating for all products. That means they have no chance of being accepted for a loan and risk damaging their credit score if they were to make an application. For those that did check their eligibility, nearly half (45%) had a 70% or better chance of being accepted for at least one credit card or loan and more than one in five (21%) had a 100% chance of being accepted.

Whilst 55% of consumers don’t check their eligibility before applying for credit card or loan, 45% of consumers do.The most popular reason why people checked their eligibility (47%) was because they wanted to make sure they weren’t negatively impacting their credit rating by applying for cards and loans they had no chance of being accepted for.

Other popular reasons included:

To make sure I was only applying for deals I would be accepted for (40%)

To save time by not applying for cards and loans I had no chance of being accepted for (37%)

Because checking eligibility is easy to do (33%)

To make sure I was getting the best rates available to me (30%)

And there are signs that consumers who might not have the best credit history are taking steps to take control of their finances.

A quarter (25%) of all credit card searches on Experian’s comparison services are for credit builder cards, which help people boost their credit scores and gain access to better financial products and rates in the future.

James Jones, Head of Consumer Affairs at Experian, said “Using an eligibility-checking service can make a real difference when it comes to getting the best deal and financial products. t’s fantastic that many Brits are checking before applying for credit, and not putting their credit score at risk, but there’s still a majority who are missing out. More than 1 in 5 customers checking had 100% for eligibility, which means they don’t have to worry about which products they can get, and instead focus on finding the right credit card or loan for their needs.”